XI!! OTHER IMPORTANT MATTERS —FINANCIAL
Federal Financial Integration.—It been put forcibly to us that the sum of 114 lakhs allowed to the State, in addition to the Privy Purse of 50 lakhs, as the difference between the receipts and expenditure of Central subjects formerly administered by the State, Is very inadequate. We have, accordingly, been constrained to endeavour to find out how exactly this figure is reached* The Finance Department has furnished to us two statements which show that, on the revenue side? the average of the actual figures for the year 1857 F. and 1358 F.> has been taken, and, on the expenditure side, the actuals of 1358 F. This has been adopted as the "basic period" in the case of Hyderabad. The Indian States Finances Enquiry Committee report lays down that the basic period for revenue should be three completed financial years (actually two have been taken), the reason, being 6t individual items of revenue are liable to fluctuate in either direction; and a three-year average for revenues, wherever reliable accounts are available, is thus fully justified/5 For expenditure, the last year is taken, the reason being " in the case of expenditure, however, having regard to the trend in recent years, the level is hardly likely to go below that reached in the latest years ; we have accordingly adopted that year as the basis for our purposes" (Page 8, Indian States Finances Enquiry Committee Report, Part II). The agreement between the Government of India and the Rajpramukh of Hyderabad in this matter was executed on the 25th February, 1950.
Now it seems to us that the calculations as regards both the revenue and the expenditure lead to unduly unfavourable results for the State, The whole idea of taking an average of three years was presumably to obtain 'a representative figure, but the years selected are, for Hy4^&l>&4* "the most 'unrepresentative that could: have']toe&.1' It is not often in the history of a State t one" comes across ft period of determined